Cloud kitchen startup Edabba plans to raise funds for expansion

Cloud kitchens are those that only have kitchens with no sitting arrangements for customers and food is delivered either online or through food aggregators like Swiggy or Zomato.

The bootstrap start-up currently has eight kitchens located in Kolkata and Bengaluru.

The cloud-based chain plans to set up 12 more kitchens in these two cities in the coming six to nine months after raising funds.

“Ours is a family-funded start-up which started in 2019 when the idea of a cloud kitchen was new in the country. The business of online food ordering really picked up during the pandemic years of COVID in 2020 and 2021 as people were not able to go out of their homes,” founder of ‘edabba’ Vedant Pasari said.

Pasari is pinning his expansion hopes on the “fast-growing size of the cloud kitchen market.”

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According to research firm Dolat Capital, the country’s food and beverage (F&B) market is worth USD 56 billion, including QSR (quick service restaurants), hotels and sit-in restaurants. The penetration of the online segment is around eight per cent. “For our type of industry, this is quite low when compared to the US which is at 35 per cent and China at 69 per cent,” Pasari said quoting the findings of the research firm.

The compounded annual growth rate (CAGR) of this business segment in India is projected between 2022 and 2027 is 28.9 per cent, he added.

The entrepreneur said ‘edabba’ is currently earning around Rs 12 crore annually and garners around 25,000 orders per month.

“For this kind of industry, the valuation amount is typically seven times the annual income. But the amount of funds required will be determined only after the valuation is complete,” he added.

“Going forward, we are planning to set up QSRs with sitting arrangements,” Pasari said.

QSRs are eateries that typically offer fast food items that require minimal preparation time and are delivered through quick services.

Asked about the impact of food inflation on the margins of the cloud kitchen, he said it has not been possible to absorb the spike in input prices even partially.

“We had to pass on the entire food price spike on the consumers,” he added.